Copper industry experts.
Q: What is the marginal increase in overseas demand and the growth rate of China's domestic consumption in 2023 and 2024?
A: We note that China's domestic copper consumption growth rate in 2023 will be about 55%, but ** will fall to 25% to 269% level. The main factor is that both exports and domestic sales have increased significantly in 2023, with exports of home appliances and electrical equipment performing well. However, it is expected that the appreciation of the renminbi in 2024 will adversely affect domestic merchandise exports as interest rates are cut overseas. The downward revision of the forecast for domestic consumption growth is mainly due to changes in monetary policy and export premises.
Q: What is the trend of copper consumption and growth rate in the photovoltaic industry?A: In 2022 and 2023, the PV industry has an inventory of up to 100GW due to industry competition and rising costs. Although the main focus is on installed capacity to drive copper consumption, we have observed that the downward pressure on copper consumption is increasing, from 3,500-4,000 tons in 2020 to about 3,000 tons now, and this downward trend is expected to continueThis change is mainly due to the increased use of copper substitutes, such as aluminum alloy cables. It is expected that by 2024, the PV industry may increase by less than 10%, which means that installed capacity growth will slow down, and the decline in copper consumption will further affect copper consumption.
Q: What is the impact of the new energy sector on global copper consumption?
A: From the perspective of new energy as a whole, the growth rate of global copper consumption is declining. In 2023, the new energy vehicle, wind power and photovoltaic industries will consume about 3.11 million tons of copper, accounting for 12% of the world's totalIn 2022, this proportion will be 2.19 million tons, accounting for 9%. From 2024 to 2027, copper consumption is expected to grow by only about 1 percentage point per year. Although the base effect plays a role in it, it is an indisputable fact that the reduction of copper consumption per unit in the new energy industry is an indisputable fact, among which the decline in the photovoltaic and new energy vehicle industries is the most obvious.
Q: What are the highlights of the growth of copper consumption in traditional fields overseas?A: It is worth noting the contribution of overseas traditional sectors, especially the Middle East and Southeast Asia, to the growth of global copper consumption in 2023. For example, India's consumption growth rate has been confirmed to be above 10%, and although it has a small base, it has great potential for the future. At the same time, we are also observing the demand for reconstruction of the European power grid due to the development of new energy sources and the aging of the grid, and the increase in grid investment in the EU means that this part of the demand will grow. Therefore, I.
The growth rate of global electrolytic copper consumption in 2024** will be 31%, and it is believed that China's growth rate will be only about 25% to 26%, indicating that our expectations for overseas markets are higher than those in China. Q: In the context of the sharp decline in smelting and processing fees, how will copper prices change?
A: At present, the smelting and processing fee has dropped by 55% from the high level, which means that the cost pressure of the primary refining plant has increased, and the profitability may deteriorate. As market confidence, the momentum of industrial replenishment has not yet emerged, and the current smelter inventory can still be supported, it is difficult for us to see smelters immediately reduce production due to the reduction of TCRC. Therefore, we believe that the balance between the copper market** and consumption will take time to adjust, and the market will need time to repair. Copper prices are likely to fall in the short term to provide better acceptance for the downstream. If it is about 1,000 yuan or 200 US dollars, it will quickly cool the spot and new order markets, which may cause some companies to stop production due to unprofitable. Therefore, we recommend a downward adjustment first and then after the market recovers, which will provide investors with a better time to enter the market.
Q: What are the benchmarks** for TC (Processing Fee) and RC (Refining Fee) that have not yet been determined at the end of last year? Is this benchmark** annual, quarterly, or semi-annual? What is the percentage of this part in the overall transaction?
A: The benchmark ** set at the end of last year was around $80, which not all smelters have the capacity to contract, but only as a benchmark indicator. In 2024, for example, about 27 million tonnes of copper concentrate will be imported into China, of which 40% to 45% will come in through **merchant, and 55% to 60% will be sold directly to smelters from mines. In the mine segment, only about 70% is priced on the $80 benchmark. The rest may be a single negotiation, or not following the benchmark**, such as large miners such as Bhpbilliton and Angloamerican. Traders account for 40% to 45% of the 27 million tonnes and they usually don't enforce benchmarks, especially in anticipation of a tight market in the future, and they may use spot trading more to increase returns and resist risk.
Q: How will TC RC** affect the smelter's financials? A: TC RC** is expected to show up in the smelter's financial statements in March or April, with a significant deterioration. Due to the presence of intercourse.
Due to the poor forward loading and transit times and the high cost of use of inventory, the recent financial statements of the smelter may not fully reflect the pressure caused by the low TC RC. The smelter's financial position is likely to deteriorate in the coming months as low** transactions are recorded as material is recorded on the books.
Q: What types of companies will be affected in the copper industry in the future, and will face the risk of reducing production capacity or withdrawing from the market?
A: Considering the decline in TC RC**, the first to be affected will be those private and small-scale smelters with smaller assets, including SASAC enterprises in some places. These companies lack sufficient negotiating power and risk resilience and may face the risk of reducing production capacity or exiting the market. The leading large enterprises are relatively strong in terms of risk resistance, but it cannot be ruled out that they are also waiting to see the market dynamics in order to respond.
Q: What is the situation at the Mirador mine? Do political or war factors affect copper**?
A: Copper ** in the Mirador mining area is very important to the Chinese market, accounting for a considerable proportion. We have not yet received any information that the transport or production in Mirador will be affected by politics or war, but we are constantly monitoring the situation. Due to the complexity of politics and war, it is difficult to clarify the future ** situation.
Q: Some mines do not trade according to the benchmark, are they signing up for a higher or lower TCRC** than the benchmark? A: In the current market cycle, these mines will typically have a lower TCRC** than the benchmark. For example, some large mines use quarterly, monthly or occasional tenders to determine the final settlement of the TC, which is well below the benchmark in the case of a mineral resource crunch. Recently, Bogtwo's tender** has reached a single-digit level below the benchmark price of $80.
Q: How will the current ** pressure be transmitted to the smelting end? Will the smelting capacity overhaul in the second quarter of 2024 have a boosting effect on copper**?
A: In the second quarter of 2024, nearly 3 million tons of domestic production capacity is planned for routine maintenance. At present, there are some voices in the market that these repairs may be brought forward or expanded due to TCRC issues. As far as we know so far, most of the overhauls are based on.
The old was planned. However, due to the tightness of T3, the market is slightly turbulent, and copper prices may be **. From a rational point of view, if we assume that these overhauls are planned, it may be a better time to observe the impact of the transmission of TCR and the reduction of smelter production on ** in May or June.
Q: Why is the latest downstream demand data showing an increase in operating rates, but the demand situation you mentioned is not optimistic?
A: Although the operating rate data shows that there has been an increase, in essence, some copper rod factories have not passed on the cost well, resulting in the accumulation of finished product inventory, and a certain reserve has been made for sales after the holiday. In addition, this year's recycled copper rod factory was closed earlier than usual due to poor interest rate spreads, and some orders were transferred to pure copper rod plants, which is also one of the reasons for the increase in operating rate.
Q: At present, the smelting and processing fee fluctuates greatly, what is the TCRC cost level of the smelter? What about downstream demand in the first quarter of this year?
A: After research, we learned that the direct cost of the smelter from copper ore to electrolytic copper (excluding sales, financial and other expenses) is about 50 US dollars, which is a relatively important pressure point. In addition, fluctuations in sulfuric acid can have a significant impact on this pressure point, and sulfuric acid can significantly affect a smelter's tolerance to TC. As for the full cost of the smelter, if the so-called 'three fees' are included, about $70 is a very important pressure point. The stocking demand in the first quarter of this year is not obvious enough, which is different from the past. This has had a certain impact on our prediction of annual demand, and we need to take into account the specific ideas of downstream manufacturers.
Q: What is the current sentiment towards the copper industry and the measures to boost consumption in China?
A: The current market sentiment is not pessimistic, investors are showing a wait-and-see attitude, waiting for a series of stimulus measures from China** to have an effect. China** has already taken action in affordable housing, urban village renovation, and home appliance sales, all of which can have a certain boosting effect. Sales of home appliances in the first quarter were good, including air conditioners, refrigerators and washing machines. In general, there is no outright pessimism or despair in the market.
Q: For the consumption growth and trend of China's copper industry in 2024, there are:
What**? A: China's copper industry will face pressure to maintain high consumption growth in 2024, and we expect the growth momentum to weaken. We've revised down what we've seen from the real estate completion end and the PV installed side**. In the home appliances and construction sectors, we expect negative growth, although the previous forecast for property completions has been revised upwards from negative 20% to negative 10% or less, partly due to various supportive policies for the property market in China**. In 2023, the home appliance sector will achieve growth under the dual stimulus of overseas demand growth and the depreciation of the RMB, but it is expected that these stimulus factors will weaken in 2024, and the room for export growth will be limited. Although the construction and home appliances sectors are not expected to be good, other sectors such as electricity, military industry, and ships will maintain positive growth, but the overall consumption growth rate will slow down. Guidance on earnings or judgment on the nature of earnings expectations: Poor expectations in the construction and appliance sectors, while other sectors such as electricity are expected to maintain positive growth.
Q: What is your view on the copper market in the second half of 2024?
A: The market in the second half of 2024 is pessimistic, and smelters are expected to face a shortage of supplies, as global copper smelting capacity will expand significantly in 2024, which will further worsen TC RC (Smelter Processing Fee and Refinery Fee), resulting in a further reduction in TC RC. Some smelters may adopt a 5-meter direct blowing production method, which may damage the expectation of increased electrolytic copper production, which needs to be paid attention to, which may bring resilience to **. Qualitative judgment: The significant expansion of global copper smelting capacity will worsen TC RC and may damage the expectation of increased electrolytic copper production.
Q: What are the estimates for copper scrap imports in 2023 and 2024?
A: In 2023, there is a good increase in copper scrap imports, with an increase of about 150,000 metals, and the total import volume is estimated to be around 1.8 million tons. The main reason for the increase in copper scrap** in 2023 is the growth of China's consumer demand and the opening of the import profit window in the second half of the year. But by 2024, we expect the resilience of copper scrap** to decline, with little to no increase overseas**. The main factors include a decrease in the rate of copper scrap overseas, as well as an increase in the use of copper scrap in Europe and North America, which has shrunk the amount of copper scrap to China. Domestically, we expect the increase in 2024 to be less than 200,000 tons, far less.
Increments for 2023. At the same time, as local governments inhibit investment in unnecessary projects, the efficiency of domestic copper scrap output may decline. Judgment on the nature of performance guidance or performance expectations: the elasticity of copper scrap** will decline in 2024, and the increase in domestic copper scrap is far Q: What is the impact of processing fees** on the interpretation of copper prices?
A: As we stand, the first quantum event is actually the biggest interference. According to the budget, the Panamanian mine was supposed to increase production by 400,000 tons in 2024, but last year it was able to produce 350,000 tons. There is also a slight increase expected this season, but there is a large yield loss due to the first quantum event. Panamanian mines will not resume production until September 2024 at the earliest, which means that about two-thirds of the year's production will be lost, or nearly 200,000 tonnes of reduction, which will be the biggest factor affecting copper production in 2024. Q: What disruptions may the copper industry face in the future? What is the impact of Chile and Peru?
A: In future interference, in addition to the first quantum event, another thing we need to consider is the marginal impact of the ** end. At the moment, the regions of greatest concern are Peru and Chile. These two areas are likely to be subject to continued community disturbances in the future, as is the case with the MG mine. The main problem facing Chile is the decline in the grade of old mines, especially in Chile, and the possibility that Chile and Peru will jointly face the issue of renegotiation of mining taxes, which will lead to an increase in the cost base of mines. Therefore, the priority area of concern should be Chile, followed by Peru.
Q: What about the impact of other regions such as Ecuador and the DRC?
A: It's hard to assess the local conflict in Ecuador. If Ecuador is excluded, we believe the focus should also be on Peru and Chile. As for the DRC, we are not particularly worried, as the situation should gradually stabilize with the end of the **. In Africa, the main problem is not production, but transport, which can be a constant disruptor. In summary, we believe that the main focus is on Peru and Chile from a primary production perspective.
Minutes**: Wen Bagu Research] Mini Program